Should You Measure Pricing Elasticity?

Being able to know what is going to happen before you change prices, would be an incredibly powerful insight. With this kind of insight, you could model potential customer reactions to new prices and even understand what will happen to revenue and margin.

The answer to being able to have such insight, is through the means of price elasticity. It is a very powerful tool, but it is often overlooked by business-to-business companies. Pricing Brew carried out a survey, to obtain a better understanding as to why companies are not taking advantage of this pricing capability.

From their results they found the following key reasons:

• The daily grind and constant fire-fighting tends to hold pricing teams back from understanding the concept and capabilities of price elasticity.
• The traditional methods for measuring elasticity do not work in a B2B environment. Few companies have good data around the deals that their sales teams quote and the win/loss outcomes.
• Conflicting messages from pricing experts on B2B price elasticity give people pause.